London’s FTSE 100 cheapens 35.2 points to 7,436.5 on Thursday as European equities take their cue from Wall Street and with the official scrapping of a groceries mega-merger and continued commodity crunch also weighing on the blue-chip benchmark.
Supermarkets giant Sainsbury’s (SBRY) slumps 4.2% lower to 217.1p as the Competition and Markets Authority (CMA) blocks its proposed £7.3bn takeover of Walmart-owned Asda. This is a massive blow to both grocery groups and their bold plan to leapfrog UK market leader Tesco (TSCO) and will also stoke commentary surrounding the future of Sainsbury’s CEO Mike Coupe in particular.
In response to the news, an irate Coupe complains: ‘The specific reason for wanting to merge was to lower prices for customers. The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1bn out of customers’ pockets.’
Elsewhere, housebuilder Taylor Wimpey (TW.) tumbles 6.3% to 180.2p on a first quarter trading update which is weaker than expected, flagging weaker pricing and higher costs. Taylor Wimpey cautions that margins for the full year are likely to be ‘slightly lower’, that the year will be weighted to the second half and that the housing market can be described only as ‘stable’.
Royal Bank of Scotland (RBS) cheapens 3.5p to 253.2p on the surprise resignation of CEO Ross McEwan after five and half years in the hot seat at the government-backed lender.
Banking peer Barclays (BARC) sheds 2.2p to trade at 164.2p as first quarter pre-tax profits miss consensus estimates following a challenging period for the corporate and investment banking business.
Fertilizer development company Sirius Minerals (SXX) skips 4.6% higher to 21.9p after inking an exclusive 10-year supply and distribution agreement with European agribusiness group BayWa Agri Supply & Trade for the distribution of its POLY4 product in Europe.
Specialist carpet retailer Carpetright (CPR) clips ahead 10.1% to 16.85p on an in-line fourth quarter trading update. This highlights a significant improvement in the UK like-for-like sales trend with consumer confidence starting to return to the core domestic business following last summer’s restructuring. CEO Wilf Walsh says trading in Europe continues to track ahead of last year and his charge is on track to achieve previously-announced annualised savings of £19m.
Photobooths-to-laundry machines operator Photo-Me International (PHTM) rallies 4.7% to 89.5p on the acquisition of French self-service fresh fruit juice equipment play Sempa, a deal marking Photo-Me’s entry into the $154bn fresh fruit and vegetable juice market.
Scotland-headquartered sausage skins maker Devro (DVO) fattens up 7p to 194.6p on a largely positive trading update for the period from 1 January to today, one highlighting momentum building through the quarter following a slower start to the year. Devro flags ‘good trading’ in North America, South East Asia and China, albeit offset by testing conditions in Russia, Japan and Latin America, and insists cost saving initiatives are on track too.
